Versions

 

COB 2.4.1 Guidance

1. The obligation in Rule 2.4.1(1) applies to an Authorised Firm when it first provides, or intends to provide, a Financial Service to a Professional Client.
2. Once an Authorised Firm has first classified a Person as a Professional Client, under the procedures in Rule 2.3.3(1), that Professional Client has a right at any subsequent time to ask, under Rule 2.4.1(3), to be re-classified as a Retail Client to obtain a higher level of protection. Although the right to ask the firm to be re-classified as a Retail Client is available to the Professional Client, as a matter of good practice:
a. the firm should also periodically review whether the circumstances relating to the particular Client remain the same; and
b. if the firm becomes aware of any circumstances which would warrant a re-classification of the Client, initiate the process with the Clientto give that Clienta more appropriate classification.
3. Where an existing Professional Client is offered a new Financial Service or new financial product, a re-classification might be appropriate if:
a. the new Financial Service or financial product is substantially different to those previously offered to that Client; and
b. the Client's experience and understanding appears not to extend to the new Financial Service or financial product.
4. An Authorised Firm cannot provide Financial Services to a Retail Client unless it has a Retail Endorsement on its Licence. However, such a firm may refer to another appropriately licensed firm any Person who elects to opt-in as a Retail Client.
Derived from DFSA RM149/2015 (Made 11th February 2015) [VER24/04-15]